IQE pays $75 million for Kopin Wireless

LONDON – U.K. semiconductor wafer supplier IQE has agreed to acquire the compound semiconductor assets of Kopin Corp. for $75 million in cash.

Kopin (Taunton, Mass.) supplies gallium arsenide transistors to the mobile communications sector and has a manufacturing subsidiary in Taiwan that is included in the deal. Kopin said the transaction would allow it to focus on the commercial development of its mobile communications technology, called Golden-i, and on its microdisplay products.

The deal is expected to close by the end of January.

Kopin Wireless has been making heterojunction bipolar transistors (HBTs) on gallium arsenide substrates since 1996. The company's compound semiconductor revenues in the first nine months of 2012 totaled approximately $44 million.

Under the terms of the deal, Kopin will receive from IQE (Cardiff, Wales) an up-front payment of $60 million, subject to certain working capital adjustments. It is scheduled to receive the remaining $15 million in January 2016. The transaction includes Kopin's leased III-V product manufacturing facility in Taunton as well as the company's investment in Kopin Taiwan Corp., its subsidiary in Hsinchu, Taiwan.

"Kopin's HBT business is an ideal strategic fit for IQE, broadening our customer base and enhancing our product portfolio," IQE CEO Drew Nelson said in a statement issued by Kopin.

To fund the transaction, IQE said it intends to borrow $40 million from HSBC Bank, with $20 million funded from the proceeds of shares placed in the company. IQE said it would use cash flow over the next years to pay the deferred $15 million due in 2016.